“FWC Full Bench finds that casual service does not count towards service for enterprise agreement redundancy pay”

Executive Summary

The Fair Work Commission (FWC) Full Bench found that a prior period of casual service does not count as service for the purposes of calculating redundancy entitlements under the Unilever Australia Trading Limited Tatura Site – Enterprise Agreement 2015 (the Agreement).

Background

In May 2017, the employer made a number of positions within its business redundant, including the positions of several employees who had, before becoming permanent employees, previously served as casual employees.

Upon the redundancy of their positions, the employees disputed their redundancy pay calculation and claimed that their periods of service as casual employees should count towards their service for the purpose of calculating their entitlements.

The employer disagreed.

Redundancy entitlements in this case were provided for in the “redundancy agreement” contained in an attachment to the Agreement. Clause 1 of the redundancy agreement stated that the redundancy agreement “does not apply to casual or seasonal employees.”

In the first instance, the employees (as represented by the AMWU) took their dispute with their employer about their redundancy entitlements to the FWC. The matter was heard by a single member of the FWC who held that casual service did count towards service for the purpose of calculating redundancy entitlements.

This decision was based on clause 2.7 of the redundancy agreement which stated that upon the redundancy of their position, an employee would be entitled to “(a) Four (4) weeks’ pay per year of service and pro-rata for incomplete years of service”.

The AMWU successfully argued that “service” in this context and in the overall context of the Agreement was not defined and therefore should not be limited to service as a permanent employee.

The employer appealed that decision to the FWC Full Bench.

Full Bench Decision

On appeal, the employer submitted that there were errors in the first instance decision and it should be set aside.

Specifically, the employer argued that the word “service” should not be interpreted to include casual service and should be restricted to permanent service as that was the intention of the redundancy agreement.

The Full Bench found that, in the end, it was not necessary to clarify the interpretation of “service” in the redundancy agreement because as a matter of function, the redundancy agreement expressly stated that it did not apply to casual or seasonal employees. Accordingly, whether the word “service” included casual service or not did not matter because the redundancy agreement did not apply to casual employees, including where permanent employees had previously served as casual employees.

The Full Bench found that the exclusion of casual employees from coverage under the redundancy agreement meant that any prior casual service could not count towards the calculation of the employees’ redundancy entitlements.

What can your business learn from this decision?

The debate about whether a period of casual service counts towards “service” for the purpose of redundancy entitlements is ongoing.

Determination of the question will turn on the facts of each case, including the contract of employment or industrial instrument that applies to the employer and the employee.

Where a clause operates to exclude casual employees from redundancy entitlements, it may restrict the ability of permanent employees from claiming any period of casual service as “service” for redundancy purposes.

Modern Awards

“Casual conversion clause to commence 1 October 2018“

As reported in our July 2017 E-update, as part of the 4-yearly review of modern awards, the Full Bench of the Fair Work Commission (Full Bench) has determined that a casual conversion clause should be included in existing modern awards which do not already have one.

A model casual conversion clause was proposed providing regular casual employees with the right to request their employment to be converted to part-time or full-time employment.

In August 2018, the Full Bench finalised the model clause to be inserted into most modern awards. Some modern awards will have a variant version due to the specific nature of the industry covered, for example the Stevedoring Industry Award 2010 and the Local Government Industry Award 2010.

Under the new model casual conversion clause a “regular casual employee” is a casual employee who, over a period of 12 months, works a pattern of hours on an ongoing basis which the employee could continue to perform as a full-time or part-time employee. An employer may refuse the request on reasonable grounds and after consultation with the employee.

The model term provides that reasonable grounds for refusal to convert to permanent employment include whether:
• it would require a significant adjustment to the casual employee’s hours of work;

• it is known or reasonably foreseeable that the regular casual employee’s position will cease to exist within the next 12 months;

• it is known or reasonably foreseeable that the hours of work which the regular casual employee is required to perform will be significantly reduced in the next 12 months; or

• it is known or reasonably foreseeable that there will be a significant change in the days and/or times at which the employee’s hours of work are required to be performed in the next 12 months which cannot be accommodated within the days and/or hours during which the employee is available to work.
Any agreement to convert to full-time or part-time employment must be recorded in writing.

Determinations varying 84 modern awards to insert a casual conversion clause have been made and will come into operation from 1 October 2018. Employers are reminded to regularly review applicable modern awards, particularly as the Fair Work Commission progresses through the 4-yearly review.

Executive Summary

A labour hire company has been ordered to reinstate an employee to their former position with a host employer after the Fair Work Commission (FWC) found that the employee was unfairly dismissed by the labour hire company.

Background

Ms Star (the Employee) was employed by WorkPac, a labour hire business. On commencement of her employment relationship with WorkPac, the Employee was provided with a registration pack containing various contractual documents including a document titled “Casual or Maximum Term Employee Terms and Conditions of Employment” (Terms and Conditions). The Terms and Conditions stated that the Employee’s employment with WorkPac was on an assignment-by-assignment basis, with each assignment representing a discrete period of employment on a casual or maximum term hourly basis.

On 22 October 2013, the Employee commenced an assignment as a casual Level 3 Mine Operator at Goonyella Riverside Mine, which was operated by BHP Billiton Mitsubishi Alliance (BMA). In the Employee’s registration pack was a ‘Notice of Offer of Casual Employment’ relating to this assignment.

The Services Contract between WorkPac and BMA contained the following relevant provisions:
• WorkPac was required to comply with lawful directions given by BMA; and

• If BMA was dissatisfied with a labour hire employee’s performance, it could hold discussions with WorkPac to address the issues and provide WorkPac with a reasonable opportunity to remedy the issue and, if still dissatisfied, it could give written notice to WorkPac requiring the removal of any of WorkPac’s personnel from its site.
On 10 November 2017, WorkPac was advised by BMA that the Employee was no longer required at the mine, with immediate effect. On 13 November 2017, WorkPac advised the Employee that she was no longer required by BMA and that, whilst it did not know the reason for this, it was not related to her performance.

The Employee claimed that she was unfairly dismissed on this occasion and sought reinstatement to her position at the mine.

She claimed that BMA had potentially issued the direction on 10 November 2017 as a result of an incident the previous day in which she had expressed concerns about dumping an ore load in a poorly lit area.

WorkPac denied that the employment had been terminated on 13 November 2017 and claimed that there was an underpinning employment relationship (independent of the Employee’s assignment with BMA) that was terminated when the Employee informed WorkPac that she was not interested in alternative assignments.

Decision

The FWC rejected WorkPac’s arguments and found that the Employee was dismissed by WorkPac on 13 November 2017.

In doing so, it referred to the Terms and Conditions which explicitly stated that an employee’s employment with WorkPac was on an assignment-by-assignment basis, with each assignment presenting a discrete period of employment requiring an offer and acceptance by that employee.

In this case, an employment relationship between the Employee and WorkPac came into existence when the Employee was assigned to work at the mine and ended when the Employee was informed by WorkPac that her services were no longer required at the mine.

The FWC considered that it was more probable than not based on the evidence that the Employee’s dismissal related to the conduct issue on 9 November 2017. In this regard, it noted that WorkPac had not actually asked BMA for the reasons for their direction on 10 November 2017, which resulted in a situation where it could not rebut the inference that it was related to the Employee’s conduct. This failure to seek clarification was despite WorkPac’s usual practice which was to ask for a reason and, in the absence of BMA providing reasons, assume that the reason was not related to performance. Such a failure was significant because it potentially precluded WorkPac from exercising its rights under the Services Contract to remedy any performance issues.

Whilst the FWC was satisfied that the dismissal related to the Employee’s conduct, it was not satisfied that this was a valid reason for the dismissal, particularly for a longstanding employee.

The FWC considered that the dismissal was unfair because WorkPac had failed to discuss with the Employee the decision to remove her from the site as well as any alternative assignments prior to the termination being effected. It also considered the dismissal to be harsh because of its consequences on the Employee’s personal and economic situation and unreasonable because the decision was made on inferences that were not reasonably open to WorkPac on the information it had or on the information it could have reasonably obtained from BMA.

The FWC noted that labour hire companies cannot rely on contractual relationships such as the one that existed with BMA to “abrogate their responsibilities to treat employees fairly”. The fact that BMA exercised its right to direct removal of the Employee from its site was not considered a valid defence from WorkPac where the FWC considered the dismissal was unfair in all of the circumstances.

The Employee was reinstated to her former position at the mine, despite the FWC’s reservations about the practical effect of such reinstatement (noting that WorkPac cannot insist that BMA allow her back onto the site).

What can your business learn from this decision?

This decision confirms that labour hire companies cannot seek to rely on the actions of a host employer (or some other third party) as an excuse for failing to provide their employees with procedural fairness when seeking to dismiss them. In such circumstances, labour hire companies must take care to ensure that there is a valid reason for any dismissal and that it is done in a procedurally fair manner.

“Federal Circuit Court of Australia orders former employee to pay employer’s costs following claim made without reasonable cause”

Somerville v AFS Security 24/7 Pty Ltd & Ors (No.2) [2018] FCCA 2234

Executive Summary

A former employee was ordered to pay his employer’s legal costs of more $12,000 after the Federal Circuit Court of Australia found that the employee’s general protections claim was made without reasonable cause.

Background

The employee was employed as a fire services technician and in August 2016, his employment was terminated as the result of redundancy.

The employee lodged an application for breaches of the general protections provisions of the Fair Work Act 2009 (Cth) (FW Act) with the Fair Work Commission and then later with the Federal Circuit Court of Australia (the Court). The employee claimed that his position was not genuinely redundant but that he was dismissed in “retaliation” for making a complaint or enquiry about an alleged underpayment.

The employee’s application was ultimately unsuccessful, owing largely to the fact that the employee failed to provide evidence to support his claim.

Following the Court’s decision on the merits of the employee’s claim, the employer brought separate proceedings seeking orders that the employee pay its costs incurred as result of having to defend itself against the employee’s claim. The employer argued that the employee should be ordered to pay costs pursuant to s 570(2)(a) of the FW Act on the basis that the employee had instituted proceedings that were “vexatious or without reasonable cause”.

Federal Circuit Court of Australia Decision

The Court considered the background to the matter and the case law interpretations of the phrase “vexatious or without reasonable cause.”

The Court found that, at the time that the employee initiated proceedings against the employer he held a “genuine belief” that the termination of his employment was retaliation and that asking the Court to decide his grievance was the appropriate course of action. However, the material supplied to the Court in support of the employee’s case lacked substance. So, whilst the Court found that there was no vexatious motive on the part of the employee, it did find there was a lack of reasonable cause.

In particular, the Court noted that the employee’s allegations (which were numerous) lacked evidentiary support. The Court stated:

Even a layperson can be reasonably expected to know that proceedings in Courts rely on evidence for their proper prosecution. Mr Somerville’s allegations, at the time of instituting proceedings, were presented as allegations which lacked an appropriate evidentiary context, as to causal link between the making of the complaint and the termination of his employment. Indeed, his application (and accompanying affidavit) lacked even an indication as to any such evidentiary context.

The Court commented that it approached the awarding of costs cautiously due to the Fair Work jurisdiction of the employee’s application (which is normally a no costs jurisdiction) but said that the FW Act “still makes it clear that instituting proceedings without reasonable cause renders an applicant liable to pay costs.”

The Court ordered that the employee pay the employer’s costs of $12,491.50.

What can your business learn from this decision?

Where an employee institutes proceedings that are vexatious or without reasonable cause, including in circumstances where the employee has no evidentiary basis for their claim, the employer may make an application to the court for orders that the employee pay the employer’s legal costs.

Work Health and Safety

“Company issued $300,000 fine for failing to ensure the health and safety of workers and other persons at work”

SafeWork NSW v Haconby Pty Ltd [2018] NSWDC 230

Executive Summary

The New South Wales District Court (NSWDC) found Haconby Pty Ltd (Haconby) guilty of failing to comply with its primary duty of care under the Work Health and Safety Act 2011 (NSW) (the WHS Act) to ensure, so far as reasonably practicable the health and safety of workers, and of persons other than workers, at work. The NSWDC imposed a fine of $300,000 for breaches of the WHS Act.

Background

These proceedings concerned a workplace death resulting from unsafe work procedures.

On 29 August 2014, Mr Booth attended Ricegrowers Ltd in order to remove four front wheels from a reachstacker – a type of a container stacker which consisted of a set of double wheels at the front, and a set of single wheels at the rear. Mr Booth had never removed or changed the wheel assemblies on a reachstacker before, and was therefore untrained in, and unaware of, the standard procedure.

Mr Booth attempted, without success, to remove the right outside wheel first using a sledge hammer and then a forklift.

After these attempts failed, Mr Booth decided to again use the sledgehammer. After hitting the wheel repetitively, the wheel assembly blew off at such force that it hit Mr Booth on his left-hand side and pushed him backwards 5 – 10 metres. Uninjured, Mr Booth immediately notified the Contract Manager at Ricegrowers, and other employees at Roundabout Tyres of the incident.

Mr Booth then returned to the reachstacker and attempted to remove the left outside wheel. An employee of Ricegrowers, Mr Mace, offered his assistance and used the sledgehammer to hit the wheel. On the last hit, the wheel assembly blew off and hit Mr Mace in the head, threw him back 10 metres and resulted in fatal injuries. Another Ricegrower employee, Mr Newton who was standing nearby was also blown to the ground.

After the incident, it was discovered that the directors of Haconby were not aware of the type of training Mr Booth and other workers had in the removal of tyres. Haconby was also not in possession of two tyre removing manuals which specifically stated that steel hammers were not to be used, and that tyres must be deflated before removal. Neither Haconby nor Ricegrowers carried out a risk assessment for their workers in relation to the removal of the reachstacker wheels.

Decision

Haconby was charged and pleaded guilty to failing to comply with its health and safety duties under sections 19(1) and 19(2) of the WHS Act by failing to ensure, so far as is reasonably practicable the health and safety of Mr Booth, Mr Mace and Mr Newton and exposing them to risk of death or serious injury contrary to section 32 of the WHS Act – a category 2 offence.

The NSWDC held that Haconby’s level of culpability was “mid-range”. In coming to that finding, the NSWDC identified the following steps that could have been taken by Haconby to minimise or completely eliminate the risk:
• Have in place a work procedure for the removal of wheel assemblies that requires deflation prior to removal;

• Have in place a work procedure that if the tyre does not deflate, work shall be ceased until a safe work method is identified;

• Training and instructing workers that both the inside and outside of tyres were to be deflated before removal; and

• Ensuring that its tyre fitters were aware of and followed the procedures in the relevant manuals.
In assessing the objective seriousness of the offence, the NSWDC considered the actions of the employer after the incident. Roundabout Tyres and Edward River Services Centre banned its workers from undertaking tyre related work on heavy industrial machines, and also provided refresher training about stopping a task if it cannot be done safely. Haconby also no longer performs any tyre related work as it had since sold Roundabout Tyres and Edward River Services Centre.

The NSWDC also identified the following aggravating factors:
• Mr Mace’s death; and

• The fact that two incidents occurred on the same day from the same tasks, and that the first incident failed to cause work to stop.
In light of the above, the NSWDC imposed a fine of $300,000 in total for both offences (inclusive of a 25% discount for the guilty plea).

What can your business learn from this decision?
Employers should ensure that they have policies in place that require workers to cease a certain task once it has been identified as dangerous. Employers should also ensure that risk assessments are consistently conducted and that safe work operating procedures are in place. Employers should give employees access to all instruction manuals that are applicable to certain tasks. Further, regular training should be provided to ensure that employees are aware of all policies and procedures and of the resources available to them.

“Company fined $112,500 for failure to follow the safety recommendations given by a contractor installing a hydraulic brake press”

SafeWork NSW v Duct Australia Pty Ltd [2018] NSWDC 231

Executive Summary

The New South Wales District Court (NSWDC) has found Duct Australia Pty Ltd (Duct) guilty of failing to comply with its primary duty of care under the Work Health and Safety Act 2011 (NSW) (the WHS Act). Duct failed to follow safety recommendations given by a contractor during the installation of a hydraulic brake press. It was found that this failure exposed employees to a risk of serious injury or death.

Background

Duct operated a sheet metal fabrication business. Mr Singh was employed by Duct as a General Hand when he suffered a crushing and amputation injury to his fingers by a hydraulic brake press.

On 25 April 2014, Duct purchased the hydraulic brake press. The press had a number of standard safety features including:
• Side safety guards;

• Enclosed rear door with sensor;

• Control panel with emergency stop;

• Foot panel with emergency stop;

• Foot pedal with emergency stop;

• Shroud guard; and

• Key locking system.

When ordering the press, Duct requested an additional safety feature of a light curtain to be fitted which would cause the press to stop if there was an obstruction. The light curtain was initially set at the minimum clearance achievable, being 10 mm, and could be adjusted up or down to accommodate differing thickness of materials.

Duct engaged J.B Machine Tools Pty Ltd to install the press and to provide training in the safe operation of the machine. During the training J.B Machine Tools recommended that Duct fix the light curtain in place at a certain minimum clearance. Duct declined to do so as this would limit the future use of the press.

Following installation, some employees received training about the light curtain and were advised that they were not permitted to adjust it without authorisation from Duct. Only select employees were trained on how to adjust the light curtain, of which Mr Singh was not one. Training on how to operate the press and on the safety features of the press was also provided, however at no time was there a Safe Operating Procedure in place for the press.

On 4 October 2014, Mr Singh was operating the hydraulic brake press to fold channels in sheet metal. When Mr Singh realised that the metal was not folding properly, he stopped and sought assistance from his supervisor who was thought to have resolved the issue. Mr Singh resumed operating the hydraulic brake press only to find that the metal was still not folding properly. Without moving his hands from the machinery, he turned his head to speak to another employee. During this moment, the blade of the press descended and crushed four fingers on his left hand. These fingers were later amputated.

Decision

Duct pleaded guilty to a category 2 offence of failing to comply with its duty under s19 of the WHS Act and exposing a worker to risk of serious injury or death.

The NSWDC identified the particulars of the breaches as follows:
• Failure to develop a Safe Operating Procedure for the operation of the press and the adjustment of the light curtain;

• Failure to ensure workers were trained and assessed as competent in the Safe Operating Procedures;

• Failure to prohibit workers from operating the press unless and until they were properly trained; and

• Failure to ensure the light curtain on the press was adjusted for the correct size of metal being worked.
The NSWDC stated that the conduct was more serious when regard was had to the recommendations made by J.B Machine Tools when installing the machine. The NSWDC noted that it had been:

“…recommended that the light curtain be fixed in place at the minimum clearance of 10mm, presumably so that exactly what did happen in this incident, could not happen. It is reasonable to presume that if the light curtain had been so fixed, Mr Singh would not have been injured.”

The NSWDC declined to find that Mr Singh had shown a foolish disregard for his own safety by turning his back on the machine without removing his hands. The NSWDC reaffirmed the well-established principle that:

“the duty holder must make allowances for human error, such as inadvertence or inattention on the part of an operator of dangerous machinery.”

The NSWDC convicted Duct and imposed a fine of $112,500 for breaching the WHS Act.

What can your business learn from this decision?
This decision reiterates the need for employers to seriously consider professional advice given to them about the safe operation of dangerous machinery. When working with dangerous machinery, employers also should ensure that they develop safe operating procedures and train employees accordingly. This decision also emphasises the importance of employers prohibiting employees from operating machines without having received proper training.

Workers Compensation

“Lump sum compensation for permanent impairment not recoverable where death shortly follows”

Hunter Quarries Pty Ltd v Alexandra Mexon as Administrator for the Estate of the Late Ryan Messenger [2018] NSWCA 178

Executive Summary

The NSW Court of Appeal has held that lump sum compensation for permanent impairment under workers compensation legislation is intended to compensate a worker who suffers continued impairment from an injury, and is not intended for circumstances where death inevitably follows in a short period of time.

Background

The worker was employed by Hunter Quarries Pty Ltd when an excavator that he was operating tipped, causing him to suffer a crush injury to his chest. A few minutes later, he died from his injury.

Liability for the injury was accepted by the workers’ compensation insurer and a lump sum death benefit was paid to the worker’s estate pursuant to section 25 of the Workers Compensation Act 1987 (NSW) (WC Act). The administrator for the worker’s estate (the Administrator) later made a claim for lump sum compensation for permanent impairment pursuant to section 66 of the WC Act as a result of the severe crush injury for the period of time that the Worker was unconscious until his death. This claim was declined.

Workers Compensation Commission Proceedings

The Administrator applied to have the dispute referred for assessment by an Approved Medical Specialist who initially assessed the worker with 100% whole permanent impairment (WPI) and a Medical Assessment Certificate (MAC) was issued. A reconsideration of the MAC was sought by Hunter Quarries, which assessed the worker as having 0% WPI (Reconsideration MAC). The Administrator lodged an application for review of the Reconsideration MAC to the Medical Appeal Panel on the basis that it was made on incorrect criteria and it contained a demonstrable error.

The Medical Appeal Panel agreed that there was a demonstrable error and issued a new MAC which provided that the worker had suffered 100% WPI before his death.

Judicial Review Proceedings

Hunter Quarries sought judicial review in the NSW Supreme Court of the decision of the Medical Appeal Panel. In dismissing the review application, Judge Schmidt found that “permanent impairment” as it appears in the WC Act meant when a worker suffered injury that caused serious and unrecoverable impairment rather than “temporary” impairment.

Accordingly, Judge Schmidt was satisfied that the Medical Appeal Panel correctly concluded that the worker suffered permanent impairment and was entitled to lump sum compensation as a result of his injury.

Hunter Quarries lodged an appeal to the NSW Court of Appeal.

NSW Court of Appeal Decision

In dispute was whether:

(a) “permanent impairment” as used in the WC Act includes impairment when death will inevitably follow within a short period of time; and

(b) the NSW Supreme Court should have concluded that the Medical Appeal Panel erred in setting aside the Reconsideration MAC.

The Administrator contended that as the opposite of “permanent” was “temporary”, there was an entitlement to permanent impairment as the worker could not recover from his injury. It was also submitted that impairment was “permanent”, even if for a short period of time, as long as death was not instantaneous. The Administrator relied upon the workers compensation legislative scheme being beneficial legislation and submitted that it should not be interpreted narrowly or with limitations.

Hunter Quarries submitted that “permanent impairment” did not include impairment where death would shortly follow and that for an impairment to be permanent there had to be an ongoing experience of living. It submitted that whether an impairment was permanent was a question of fact and degree.

In relation to the first issue, the Court of Appeal, per the leading judgment of Payne JA had regard to the language, purpose and context of section 66 of the WC Act and concluded that “permanent impairment” included a temporal element and required “some continued and enduring experience of living” by a worker. This did not include circumstances where death inevitably follows shortly after an injury.

According to the Court of Appeal, the language of section 66 indicated that “permanent impairment” involved a lasting or enduring reduction in functioning and did not describe an impairment which only lasted a few moments before death.

For Basten JA, “impairment” meant diminished abilities or capabilities and that section 66 of the WC Act envisaged a continued life with a compromised ability to work and capacity to enjoy life. In this way, where an injury resulted in an inevitable death, it was fatal and not an injury which caused impairment. Similarly, Simpson AJA provided that section 66 of the WC Act intended to compensate for the loss of quality of life caused by the workplace injury that continues for the worker’s life. In her view, it was not “sensible or reasonable” for lump sum compensation to be awarded where it had no meaningful benefit to a worker or where, as for the worker in this matter, they have no awareness or consciousness of the loss of quality of life.

Sackville AJA added that the ordinary usage of “permanent impairment” connoted injury or illness that had a deliberating effect on a worker’s capacity or quality of life for an indefinite period. In his view, it did not describe the impact of injury which was “incompatible with the continuation of life” or where death follows after a very short period of time.

In relation to the second issue in dispute, the Court of Appeal held that the Reconsideration MAC was correct and the Medical Appeal Panel erred in setting it aside.

Accordingly, the Court of Appeal upheld the appeal and made orders to set aside the decision of the Medical Appeal Panel and dismiss the application to the Medical Appeal Panel.

What can your business learn from this decision?

The Court of Appeal has come to a sensible conclusion in relation to the purpose and entitlement of compensation for permanent impairment. Interestingly, the Court of Appeal considered that just because the WC Act is beneficial legislation this did not mean that every entitlement had to be interpreted broadly and noted that one of the objectives of the workers compensation system was to be “fair, affordable, and financially viable.”

Need a laugh…

Q: What does the dentist of the year get?
A: A little plaque.

Q: What do you call a dentist who doesn’t like tea?
A: Denis.

Should you require any further information or assistance, please contact our Director Shane Koelmeyer on (02) 9256 7500 or via email on sydney@workplacelaw.com.au.

Information provided in this update is not legal advice and should not be relied upon as such. Workplace Law does not accept liability for any loss or damage arising from reliance on the content of this update, or from links on this website to any external website. Where applicable, liability is limited by a scheme approved under Professional Standards Legislation.